Mortgage Applications See Decline
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American mortgage applications fell for the first time in three weeks, reflecting a decline in home purchases, an industry report showed today.
The Washington-based Mortgage Bankers Association said its gauge of mortgage applications declined 0.5% to 732.3 from the prior week’s 735.9. Home purchase applications dropped 4.8% to 423.3 from 444.6.
Home “sales are going to be bolstered by employment growth, but you’re not going to have the same affordability levels and credit,” said the chief economist at Wachovia Corp., John Silvia, before the report.
Home sales will probably total 7.256 million this year, compared with a record 7.8 million in 2004, the mortgage bankers group’s latest monthly forecast shows. Housing construction, which helped boost the economy last year, may not contribute to growth this year, the group said.
Unemployment fell to 5.2% in January, a three-year low, from 5.4% in December, the latest Labor Department data showed. Housing prices rose faster last year than in 2003, while builder confidence dropped for a second month in February, according to National Association of Home Builders/Wells Fargo data released yesterday.
The value of previously owned homes rose 8.8% in the fourth quarter compared with the same three months a year earlier, according to the National Association of Realtors. In the third quarter, prices rose 7.5%.
Refinancing applications rose 4.1% in the week ending February 11 to 2530.1 from 2430.7, according to the Mortgage Bankers Association. The level is the highest since April of last year and the increase was the third straight.
The average rate on a 30-year fixed mortgage rose 2 basis points last week to 5.5%, the Mortgage Bankers Association said. At that rate, borrowing costs for every $100,000 of a loan would be $567.79 a month. That compares with $536.21 when the rate was at an all-time low of 4.99%.
Adjustable-rate mortgages accounted for 30.7% of all applications last week compared with the prior week’s 31.9%. In May of last year, before the Federal Reserve began raising rates, they were about 34%.
While 30-year fixed mortgage rates have declined from a June 2004 high of 6.34%, the month central bankers began raising their benchmark interest rate, adjustable mortgages increased.
